Q Works Group - Cultural Differences

Cultural Differences

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Market Attractiveness
The USA is known around the world as the "Land of Opportunity". There are many aspects that attract international companies to U.S. markets such as:

Almost 300 million consumers with enormous disposable income
Significant size of regional or niche markets
Dynamic market for do-it-yourself products
Focus on convenience and value
Extensive outsourcing opportunities

The Cultural Gap
Despite the tremendous market potential, the U.S. market poses unique challenges that need to be considered and addressed. Studies have shown that more than two thirds of German companies withdraw from the U.S. within five years of their start up. This points to the failure of many German companies to truly understand the U.S. culture and the American mentality. A brief comparison illustrates the substantial differences between U.S. and German business cultures.

The American way of business:

U.S. consumers tend to be more short-term oriented, with an eye toward product appearance and convenience
High level of competition and individualism
Group leaders are expected to be decision makers in a top-down manner
Americans typically display a "can do" attitude
Executive compensation includes large performance-based incentive bonuses. Profit sharing and stock options are common
Relocation is not a big deterrent for many American employees
Many state laws allow terminating people "at will" and with short notice - often two weeks
Detailed employment contracts usually are prepared for senior managers only
Strict regulations provide for equal opportunity in the hiring process for women and ethnic minorities
Paid vacation typically starts at ten days per year

How business is done in Germany:

Emphasis on product quality and long-term performance - both by customers and producers
German unions are traditionally strong. People tend to rely on consensual regulations governed by collective authority
Group leaders act as mediators integrating differing views toward consensus
New direction and proposals are often met with skepticism, challenged by "reasons why not"
Decision making processes are often slowed by a need for substantial bottom-up information flow
Entitlements are important elements in compensation and motivation
Local roots, tradition and "Bodenständigkeit" restrict mobility
Dismissals are regulated by laws and collective agreements between unions and trade associations
Quality of life means trading down salary for higher vacation and sick leave
Failure to adapt to local market differences is the main reason for failure of German firms in the U.S.